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1) Here are returns:

Stock-A Market
Yr-1 14% 12%
Yr-2 19 10
Yr-3 -16 -12
Yr-4 3 1
Yr-5 20 15

a) find out the beta for A.

b) find out the required rate of return for A.

c) Assume stock A”s return is 23%, is stock fairly valued?

2) Suppose company will spend $800,000 on piece of equipment which will manufacture fine wire for electronics industries. Shipping and installation charges will be= $240,000 and net working capital will increase $48,000.Eequipment will replace the existing machine which has salvage value of $75,000 and book value of $125,000. If firm has present marginal tax rate of 34%, find out the net investment?

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  • Category:- Basic Finance
  • Reference No.:- M914501

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